Social Security Benefits
— Your Patience May Be Rewarded
T
By Richard Weidrick, CPA
HE AMOUNT OF Social Security benefits to be received
depends on the age at which a person decides to
start collecting. Full retirement age (FRA) is the age
at which an individual is entitled to 100 percent of
the primary insurance amount — basically, the individual is
100 percent vested in a full retirement benefit based on their
respective earnings over their working career. Currently, FRA is
between ages 65 and 67, depending on a person's date of birth.
If an individual chooses to start receiving benefits before
reaching FRA, monthly benefits are permanently reduced.
The specific amount of the reduction depends on how early
benefits start. The earliest a retiree could receive benefits
is age 62. At age 62 the reduction is at the maximum level
of 25 to 30 percent. From age 62 to FRA, monthly benefits
increase permanently at a rate of 5 percent for each year
benefits are delayed.
If an individual can wait and start receiving benefits after
reaching FRA, the monthly benefit is permanently increased.
The exact increase depends on a person's age. For someone
born between 1943 and 1954, the increase would be 8 percent
per each year they delay receiving benefits. This increase could
occur until age 70. Waiting until age 70 could translate into a 32
percent larger benefit, as opposed to commencing benefits at age
66. Every $1,000 of benefits at FRA turns into $1,320 at age 70.
Many factors need to be considered before deciding to either
receive benefits early or delay them. Health, employment
opportunities, non-retirement assets and expected solvency
of Social Security itself all need to be factored when making
the determination. In certain circumstances the wait may be
worthwhile and result in substantially higher monthly benefits.
Rich Weidrick is a CPA and a Principal of Weidrick Livesay &
Company in Akron, Ohio. I
